What are the 7 biggest mistakes investors make on regular basis in stock market?

1) Looking to get rich in a hurry

The worst part about successful investing is that it is relatively boring while most people are thrill seekers looking for a short-cut. Don’t believe anyone who tells you that getting rich very quickly is easy. Anyone who has done this had a healthy dose of luck involved. There is no easy route to building wealth. It takes time, patience, discipline, and hard work. It can be simple but it is definitely never going to be easy. Be very skeptical of anyone trying to sell you the dream of an easy road to riches.

2) Not having a plan in place

There is no surest way to succeed in the stock market. But there is a sure way to fail – if you never implement a plan in the first place. An investor without a plan is no investor at all – they are speculators. Investors without a plan are the ones who will surely fail on the consistent basis because they’re constantly relying on their gut instincts to tell them what to do. Successful investing is counter intuitive.

3) Going with the herd instead of thinking for yourself

Following the herd is what caused investors to pile technology stocks in the late 1990s before the NASDAQ fell over 80% in value. It feels much safer to follow the crowd in the markets and at times crowd is right, but this can be dangerous at the extremes. Since crowd buying does not arise out of firm conviction, it is subject to fear and doubt. So if few investors are noticed selling all will follow. This leads to losses.

4) Focusing exclusively on the short-term

Focusing primarily on the short-term outcomes is silly because they are completely out of your control. It increases our activity and runs up huge trading and market impact costs from poorly timed decisions. Plus no one can guess which direction the markets will go over the short-term anyways.

5) Focusing on those areas that are completely out of control

Inflation, the actions of the Prime Minister, RBI policy, the tax policy, elections etc. These things are out of control and already discounted in the market. You can’t call and complain the Prime minister or the RBI governor for their policies. Instead one should have long-term focus and concentrate on things like what are the stocks in my portfolio, what are the future prospects of those companies, have I done the proper allocation etc

6) Taking markets personally

We have to invest in the markets as they are, not as we wish them to be. When something goes wrong in either the markets or our own portfolios, the problem is not the markets. It is each of us individually. Once you try to assign blame to anyone other than yourself or the random nature of the markets at time, you are allowing emotions to take over, which are when mistakes occur. It is our perceptions, and how our reactions are affected by those perceptions.

7) Not admitting your limitations

Over confidence is one of the biggest destroyers of wealth on the planet. It leads people believe that they have complete control over the markets. Investors who are unwilling to admit their limitations don’t provide themselves a margin of safety. They assume they will be right at all times. They never admit when they are wrong but choose to find fault in their model or the market. Intelligent investors plan on wide range of outcomes to shield them of crushing losses